“[T]he $199 Kindle Fire HD is the #1 bestselling
product across Amazon worldwide," said CEO Jeff Bezos. "The next two bestselling products
worldwide are our Kindle Paperwhite and our $69 Kindle. We’re
selling more of each of these devices than the #4 bestselling
product, book three of the Fifty Shades of Grey series.”

Common shares outstanding plus shares underlying stock-based
awards totaled 469 million on September 30, 2012, consistent with
469 million one year ago.

Net sales increased 27% to $13.81 billion in the third quarter,
compared with $10.88 billion in third quarter 2011. Excluding the
$348 million unfavorable impact from year-over-year changes in
foreign exchange rates throughout the quarter, net sales grew 30%
compared with third quarter 2011.

Operating loss was $28 million in the third quarter, compared
with operating income of $79 million in third quarter 2011. The
unfavorable impact from year-over-year changes in foreign
exchange rates throughout the quarter on operating loss was $3
million.

Net loss was $274 million in the third quarter, or $0.60 per
diluted share, compared with net income of $63 million, or $0.14
per diluted share, in third quarter 2011. The third quarter 2012
includes a loss of $169 million, or $0.37 per diluted share,
related to our equity-method share of the losses reported by
LivingSocial, primarily attributable to its impairment charge of
certain assets, including goodwill.

“Our approach is to work hard to charge less. Sell devices near
breakeven and you can pack a lot of sophisticated hardware into a
very low price point,” said Jeff Bezos, founder and CEO of Amazon.com. “And
our approach is working – the $199 Kindle Fire HD is the #1 bestselling product
across Amazon worldwide. Incredibly, this is true even as
measured by unit sales. The next two bestselling products
worldwide are our Kindle Paperwhite and our $69 Kindle. We’re
selling more of each of these devices than the #4 bestselling
product, book three of the Fifty Shades of Grey series. And we
haven’t even started shipping our best tablet – the $299 Kindle
Fire HD 8.9” ships November 20.”

Amazon.com introduced the fifth generation Kindle e-readers:
Kindle Paperwhite is the most advanced e-reader ever constructed
with 62% more pixels and 25% increased contrast, a patented
built-in front light for reading in all lighting conditions, up
to 8 weeks of battery life, and a thin and light design for just
$119; Kindle Paperwhite Wi-Fi + 3G — never pay for or hunt for a
Wi-Fi hotspot with the all-new top-of-the-line Kindle e-reader
with free 3G wireless for just $179; and the new latest
generation Kindle, the lightest and smallest Kindle, now with
new, improved fonts, faster page turns for just $69.

Amazon.co.jp launched the Japanese Kindle Store, offering
customers a vast selection of over 50,000 Japanese-language
Kindle books. In total, the store offers over one million titles,
including the largest selection of bestsellers in English and
other languages.

Amazon.com announced a new licensing agreement with EPIX for
movies including The Avengers, Iron Man 2, The Hunger Games,
Super 8, Thor, and more, expanding its catalog of title offerings
for Prime Instant Video to more than 30,000 movies and TV
episodes.

Amazon
announced significant updates to Cloud Player, including scan and
match technology which provides customers a fast and easy way to
get all of their music from their computers to the cloud. Cloud
Player customers can then enjoy their music on their favorite
devices, including Kindle Fire, iPhone, iPod Touch, Android devices, Sonos home entertainment
systems, and any web browser. Amazon also expanded Cloud Player
to the U.K., Germany, France, Italy, and Spain.

Amazon
announced it is hiring for more than 50,000 seasonal positions at
its fulfillment centers across the U.S. this holiday season.
Amazon employs more than 20,000 people across its 40 U.S.
fulfillment centers and pays its full-time, permanent employees
30 percent more than what traditional retail store employees
earn.

Amazon
has announced 19 new fulfillment centers worldwide to be opened
in time to support this year’s holiday demand.

North
America segment sales, representing amounts earned from retail
sales of consumer products (including from sellers) and
subscriptions through North America-focused websites, and
including amounts earned from Amazon Web Services (AWS), were
$7.88 billion, up 33% from third quarter 2011.

International segment sales, representing amounts earned from
retail sales of consumer products (including from sellers) and
subscriptions through internationally-focused websites, were
$5.92 billion, up 20% from third quarter 2011. Excluding the
unfavorable impact from year-over-year changes in foreign
exchange rates throughout the quarter, sales grew 27%.

Worldwide
Electronics and Other General Merchandise sales grew 36% to $8.56
billion. Excluding the unfavorable impact from year-over-year
changes in foreign exchange rates throughout the quarter, sales
grew 39%.

The
NASDAQ OMX Group announced the launch of FinQloud, a cloud
computing offering powered by AWS and exclusively designed for
the financial services industry. FinQloud provides efficient
management and storage of financial data to help market
participants streamline operations and meet regulatory compliance
requirements without making costly capital expenditures for their
underlying infrastructure.

AWS
announced that more than 300 government agencies and 1,500
education institutions are leveraging AWS for a wide range of
uses including big data analytics, high performance computing,
web and collaboration applications, archiving and storage, and
disaster relief. AWS also announced new services and features
available in the AWS GovCloud (U.S.) Region, including the
addition of high performance computing capabilities.

AWS
announced Amazon Glacier, a secure, reliable and extremely low
cost storage service designed for data archiving and backup.
Amazon Glacier is designed for data that is infrequently
accessed, yet still important to retain for future reference, and
for which retrieval times of several hours are suitable.

Financial Guidance

The following forward-looking statements reflect Amazon.com’s
expectations as of October 25, 2012. Our results are inherently
unpredictable and may be materially affected by many factors,
such as fluctuations in foreign exchange rates, changes in global
economic conditions and consumer spending, world events, the rate
of growth of the Internet and online commerce and the various
factors detailed below.

Fourth Quarter 2012 Guidance

Net sales
are expected to be between $20.25 billion and $22.75 billion, or
to grow between 16% and 31% compared with fourth quarter 2011.

Operating
income (loss) is expected to be between $(490) million and $310
million, compared with $260 million in the prior year period.

This
guidance includes approximately $290 million for stock-based
compensation and amortization of intangible assets, and it
assumes, among other things, that no additional business
acquisitions, investments or legal settlements are concluded and
that there are no further revisions to stock-based compensation
estimates.

A conference call will be webcast live today at 2 p.m. PT/5 p.m.
ET, and will be available for at least three months
at www.amazon.com/ir. This call will contain
forward-looking statements and other material information
regarding the Company’s financial and operating results.

These forward-looking statements are inherently difficult to
predict. Actual results could differ materially for a variety of
reasons, including, in addition to the factors discussed above,
the amount that Amazon.com invests in new business opportunities
and the timing of those investments, the mix of products sold to
customers, the mix of net sales derived from products as compared
with services, the extent to which we owe income taxes,
competition, management of growth, potential fluctuations in
operating results, international growth and expansion, the
outcomes of legal proceedings and claims, fulfillment center
optimization, risks of inventory management, seasonality, the
degree to which the Company enters into, maintains and develops
commercial agreements, acquisitions and strategic transactions,
and risks of fulfillment throughput and productivity. Other risks
and uncertainties include, among others, risks related to new
products, services and technologies, system interruptions,
government regulation and taxation, payments and fraud. In
addition, the current global economic climate amplifies many of
these risks. More information about factors that potentially
could affect Amazon.com’s financial results is included in
Amazon.com’s filings with the Securities and Exchange Commission
(“SEC”), including its most recent Annual Report on Form 10-K and
subsequent filings.

Our investor relations website is www.amazon.com/ir and we encourage
investors to use it as a way of easily finding information about
us. We promptly make available on this website, free of charge,
the reports that we file or furnish with the SEC, corporate governance information
(including our Code of Business Conduct and Ethics), and select
press releases and social media postings.

Analysts polled by Bloomberg revealed consensus estimates for a
loss of $0.08 per share, down from EPS of $0.01 in Q2.

However, sales are expected to rise to $13.9 billion in Q3, up
from $12.83 billion in Q2.

Current guidance for Q4 is for EPS of $0.53 and $12.83 billion in
sales.

The stock has made some pretty big moves in both directions
following the last few earnings releases.

Kaitlyn Keirnan of Dow Jones Newswires reports this afternoon
that options traders are positioning for upside in AMZN resulting
from the release:

In a sign of the heavy bullishness, as of early Thursday
afternoon, nearly half of all trades in Amazon options involved
contracts that require shares to add at least 10% to profit,
according to option data firm Trade Alert.

Eight of the 10 most-active Amazon option contracts on Thursday
were "call" contracts, which grant the right to buy shares at a
set price by a set date. The majority of the contracts expire
next Friday or on Nov. 17.